How Manageable Reached $20.4K Revenue With 3 Paying Customers on $37,500 in Funding (Interview with CEO Steve Petersheim)

Introduction and Company Overview

Nathan Latka

00:00Guys, 2019 raised a $37,000.500 pre seed round to launch his company, manageable.com, which helps teams get trained better, increases employee engagement. He got his former employer as first customer, now three customers. He's doing about $1,700 per month in revenue. He supported himself for the past five years while they built the MVP with consulting work, but is now saying, do I go full time? Do I go all in? We sure hope he does. Hey, folks. My guest

00:24today is Steve Petersheim. He's building manageable. That's mngbl.com, giving you accurate and useful appraisal. Steve, you ready to take us to the top? Sure. Alright. Did you come from real estate and say I'm sick of fighting for a 3% commission every month? I'm gonna go build software instead.

Steve's Background: From Newspaper Distribution to HR

Steve Petersheim

00:41>> No. I I came from my original career was newspaper distribution. So operations is what I did for the early part of my career. That's way back in the old economy days. You know? Anyway, then then after that became, you know, not a thing. You know, didn't wanna do that anymore. And then I decided to get into HR, because when I decided to change careers and I thought, okay, of all the things I did as a manager,

01:09>> what's the stuff I like the best? And what I came up with was generally what most managers hate, which was all the fun people stuff. Yeah. You know, all the nonsense you gotta deal with. So anyway, so then, yeah, then I got into HR and then that's when I began to really put to put together all the experience and stuff I had as a manager and then became aware of some other org dev theories and then

01:31>> implemented a lot of stuff at a certain at a company I used to work at. And And then when we looked for a digital solution for what we were doing, there was none. There was just there just was not a digital solution for what we were doing that that was on the market. And so that's when then me and the CEO that I that I worked for at that company, we decided that we we were gonna

01:51>> build it ourselves. And if and then I said if we're gonna build it ourselves, we should take it to market because it's valuable and it can work.

Nathan Latka

01:58What year was that? When did you write the first line of code?

Steve Petersheim

02:00>> That was 2019.

Nathan Latka

02:022019. Okay. So you're helping managers build their best teams, you know, recruit them, retain them, keep them engaged, help them learn faster. Correct?

What Manageable Does: Communication and Culture

Steve Petersheim

02:09>> Yeah. I mean, that's part of it. It's really more about creating a healthy culture and having

02:17>> really Manageable is really a communication system, and it's designed to help facilitate productive conversations. The idea is in the way we look at work, you can't get away from conversations, We're not using a computer to try to replace conversations. Conversations is how work gets done, right? Talking is how we get things done. And so the idea is let's make the conversations focused on what matters the most And we do that by just working you know, we

02:44>> create a structure. We have a vocabulary that really just helps managers and the culture in general just really focus on what what is the actual work being done, and then let's just talk about that. Let's not talk about personality and all this other stuff. You know?

Pricing Model and Early Beta Customers

Nathan Latka

02:59How valuable is your system to them measured by what they pay you? Right? What's the average customer paying you per month?

Steve Petersheim

03:04>> So so we're at very early stage right now. We're actually, like, just getting ready to launch our general availability product.

Nathan Latka

03:13Are you pre revenue today, or do you have any beta accounts paying?

Steve Petersheim

03:16>> We have two. Yeah. So Okay. We have three. We have three accounts now, one free and three paying accounts. So we have a little bit of revenue.

03:24>> And

Nathan Latka

03:26Well, Steve, what are so what are they paying? This you're testing. This is a beautiful moment at a company. Right? You're testing

Steve Petersheim

03:30>> the price model. We are our our rate right now is essentially $8 per employee per month. So 50 person company is gonna be paying, you know, about 400 a month.

03:43>> 100 person company would be around 800 a month, stuff like that.

Nathan Latka

03:46How many employees these first three paying customers have?

First Three Paying Customers and Seat Counts

Steve Petersheim

03:49>> So the first company is 50, then we also have one that's 20, and then a very small one that's four. So

Nathan Latka

03:56Do they pay for their whole 50 seats at once or they just start with a small group?

Steve Petersheim

04:02>> Well, right now because, again, these are, like, beta customers, so these are customers we're very close with. We've we've launched it to the whole team, but they could. It's we actually are creating a package where somebody could start with a smaller team because that's I know that's what we're gonna see in the market when we go because a lot of what we do, it's really gonna change. You know, people are gonna have to change the way

04:24>> they do stuff and when it comes to job descriptions and performance appraisals mostly. And so, you know, you might not have an HR team that's ready to push that out to everybody. So they might wanna start with a small team and then slowly build that out. And we're gonna offer a free trial for that as well.

Nathan Latka

04:41But right now, 70 seats across three accounts at $8 a seat would mean you're doing about 500 and or they're paying $592, you know, call it per month on average. And you're doing total right now something like 17,000 oh, sorry. $1,700 per month in revenue. Yeah. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data

05:03out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret

05:28evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole

05:51business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So

06:14traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised

06:39at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or

07:05if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the interview. Okay. Now I have a question though. You've gotten through the hard years, which are like the pre revenue years. How does how do you support yourself from 2019 to today,

07:26your first dollars of revenue?

Bootstrapping and Convertible Note Funding

Steve Petersheim

07:28>> So personally, I do consulting. So I do HR consulting, and I also have a cofounder. So it's really me and a cofounder, and, you know, we're using we bootstrap. We had we did have small initial investment in convertible notes, and then then the rest has been bootstrapped. Since then How much convertible

Nathan Latka

07:49notes did you raise?

Steve Petersheim

07:52>> 37,000. 37,500 total.

Nathan Latka

07:55And that was in 2020?

Steve Petersheim

07:57>> That was in 2019. So that was when I launched. Essentially, that was the initial seed money which came from my former employer. CEO that I mentioned that, you know, we decided together that we were gonna build this product, that was my former employer and so I

Nathan Latka

08:12How much equity did you give him for that investment?

Steve Petersheim

08:14>> Well, it's a convertible note, so there is no equity yet.

Nathan Latka

08:16What's the cap?

Convertible Note Terms and Conversion Trigger

Steve Petersheim

08:19>> The cap is well, I don't know. We don't have a cap. We just have mandatory conversion, which is if we when we get to 300,000, then we have a mandatory conversion. Either thousand 3 or 12/31/2025 is our main

Nathan Latka

08:35What's 300,000 what? Dollars. Of what?

Steve Petersheim

08:40>> If I if we raise $300,000, then that man then that creates a conversion event for the note, and then they get a discount on

Nathan Latka

08:47their sales. And and let's say you don't raise by the end of 2025, what does that convert at? There's gotta be a number like a cap. There's gotta be a valuation it converts at.

Steve Petersheim

08:56>> That is to be mutually agreed upon at a later date.

Nathan Latka

09:00What if you can't agree?

Steve Petersheim

09:02>> What happens with any I mean, that's you know, we don't expect that to happen, but, you know, that's a conversation we would have to fight through if that if it comes to that. We're confident that you're

09:12from the okay.

09:12>> You're from the the These these people, you know, we have a I have a very close relationship with these these people, so we don't see it as a problem. It's a it's a very favorable environment, a favorable note. You never

Nathan Latka

09:23know how people are going to react, especially, you know, years and years after. You never know. I've seen moms and dads, you know, they lend their son money, and then they they crush the son. You know? You know, lions eat their cubs all the time.

Steve Petersheim

09:36>> I I don't doubt that. I I and I'm realistic about it. I know that certainly could happen. That's worst case scenario, which we'll deal with when we get there.

How the First Customers Were Acquired

Nathan Latka

09:45Okay, fair enough. So three customers, tell me about how you got your first three customers, where'd you find them?

Steve Petersheim

09:50>> Well, so the first one was, again, this was my former employer. So the idea was I left the company to build this product and then they were building it for that group that we were then gonna take it out. So my first customer was that company, they're named Demi Learning, they're a publisher, an education public, K through eight education materials, publisher here in Lancaster, but they have international reach.

10:15>> Family business about 50 employees, so they were the first customer. The next customer came because, so it was interesting. So we spent $20.19, I got my cofounder, and we spent $20.19 getting our pitch ready, and we were gonna go raise money because that's what I think.

Nathan Latka

10:32Guys split equity fifty fifty at the start?

Steve Petersheim

10:34>> Yeah. We're fifty fifty. Yeah.

Nathan Latka

10:35K.

Steve Petersheim

10:36>> Anyway, so we we had our pitch ready. We started to give practices right around February 2020, and right when we were ready to start making appointments and really going on to go on a seed round, COVID hit, and that shut everything down. So we were trying to figure, you know, when we were neither one of us is engineers, so we're non tech founders, So we have to contract out all the development. And so we were trying

Pioneer Plan and Early Sales Strategy

Steve Petersheim

11:01>> to figure out how to get some money, so we came up with an idea, we called it a pioneer plan. And so we hit our networks, our personal networks, and we offered everybody a deal. We said, look, if you are willing to pay for a year in advance, and we didn't even have the software built at this point in time. So if you're willing to pay for a year in advance-

Nathan Latka

11:21Which was how much?

Steve Petersheim

11:23>> Well, it would depend on the size of the company. Right? So for for Demi Learning, for example, that would be what would that have been? 50 employees times eight times 12. So that's $4,800 for a company that size. Some of the companies we know, some of the people we were reaching out to, you know, they're a hundred hundred and fifty companies. So anywhere between $2,500 to $10,000 was the offer. Anyway, if they would pay for a

11:49>> year in advance, we'd bring them in. We call them a pioneer, and then we'd give them a discount on any future purchases with us.

Nathan Latka

11:56Also, what did you tell me specifically for them. What did what was the contract size for them?

Steve Petersheim

12:01>> For who?

Nathan Latka

12:02The first customer. The one we're talking about.

Steve Petersheim

12:04>> Oh, Demi Lurie. So it would have been I mean, I don't have the number right in front of me, but it was somewhere in the neighborhood of $5,000.

Nathan Latka

12:11And they pay it all upfront?

Steve Petersheim

12:12>> Yeah. They paid that all upfront. Yep.

Nathan Latka

12:14Okay. So how do you go from three customers to 300 customers? What's the plan?

Steve Petersheim

12:18>> Well, that's what we gotta figure out now. So again, we've been focused mainly on building the product. We haven't really done any sales. We've been slowly tweaking sales.

Nathan Latka

12:28But, Steve, why is that? I mean, don't you you've been doing it since 2019. Right? That's five years. I mean, don't you sort of have to quit your consulting gigs that you're forced to make manageable work? Otherwise, you're always gonna have manageable as the thing in the back of your head that's a sci thing that doesn't get any love.

Shifting to Full-Time Sales Focus

Steve Petersheim

12:40>> And that is exactly what we're doing within the next two months. So we now have the product to a point where it's stable, we know it's ready, we can now present it to people and we feel we have a product we can sell. So that's what we're doing now. So now we're gonna shift and move to a sales focus. So we are in the process now of creating a list of contacts, we have a marketing consultant

13:06>> we use that's helping us build out our lead generation platform. And, yeah, we're just gonna go out. We're gonna start right now still staying kinda local. We're not looking to go, you know, broad and national yet because the customer onboarding process is still a manual process. We have to be involved in customer onboarding.

Nathan Latka

13:25So Steve, before we go there though, I mean, this is a big moment. Right? There's a bunch of folks listening right now that have spouses, and this is the honestly, real reason a lot of folks don't make the leap is because you got a family to support. So the real question here is, like, when you talk if are you married?

Personal Story: Divorce, Family, and Commitment

Steve Petersheim

13:37>> Divorced. I got four kids.

Nathan Latka

13:38Okay. We have four okay. See you're busy. This is my question to you. Right? So for someone else listening who's divorced with kiddos Mhmm. Who's does consulting, has a really cool side project, like, how do you think through that? Because that's the real I'm guessing here. I'm definitely guessing here. You tell me if I'm wrong. You've got like real life commitments you have to pay for.

Steve Petersheim

13:54>> Oh, yeah. Yeah. Well, this is my retirement plan. So, you know, when I

14:00>> don't wanna go into too much ancient history, but went through a divorce, had a lot of financial tumults there, invested in another business, cashed out a four zero one k, all that kind of stuff. So this is my last go around. This one has to work and this one is gonna be my retirement plan so that I can help my kids. The past three years have been very lean, been very, very lean, but I knew it

14:22>> was what I wanted to do. I always knew I wanted to be an entrepreneur. I tried a couple things. None of them ever really worked, which is why again, when I got into HR and I knew I was gonna do something and I said, you know, whatever I do next, this has to I have to believe in this thing because that's the only way I'm gonna make

14:38it work.

14:38>> I knew my personality well enough at this point. So I'm gonna have to work for someone else until I find that thing that I know I'm gonna be you know, it's gonna be me. It's gonna I'm gonna be it. I'm gonna be able to sell. I'm gonna live it and breathe it. And which is why when we implemented these processes and I saw this stuff work, and then I saw the market opportunity that there was nothing

14:59>> on the market that existed for this, I knew this was it because I'm passionate about helping managers become you know, develop better habits, helping develop

15:08Got it, Steve.

15:08>> Good cultures and stuff. So so yeah. So I made the commitment because I believe in in what I'm doing, but it was

Famous Five: Books, Tools, and Advice

Nathan Latka

15:15Well, listen. We're we're rooting we're rooting. It is hard, and we're rooting for you. We're out of time, though. So let's wrap up here with the famous five. Quick one word answers here, please. Number one, favorite book.

Steve Petersheim

15:24>> Favorite book. Social Power and the CEO by Elliot Chats.

Nathan Latka

15:28Number two, is there a CEO you're following or studying?

Steve Petersheim

15:34>> I wouldn't say. No no one in particular right now. No.

Nathan Latka

15:37K. Number three, what's your favorite online tool for building the company?

Steve Petersheim

15:41>> Favorite online tool for building the company?

15:46>> The thing I've been using the most, which I need to I I wanna move into Figma, but I've been using draw.io to do a lot of my workflows and wireframing and stuff

15:55>> like that.

Nathan Latka

15:56Number four. How many hours of sleep do you get every night?

Steve Petersheim

15:59>> Between five and six.

Nathan Latka

16:00Okay. And six kiddos, not or sorry. Four kiddos, And not how old are you, Steve?

Steve Petersheim

16:07>> I am 51.

Closing Summary

Nathan Latka

16:09Last question. Something you wish you knew when you were 20.

Steve Petersheim

16:16>> That every you don't have to worry so much. Just just relax a little bit and try to pay attention to what's happening around and just let things happen instead of trying to make them happen all the time.

Nathan Latka

16:28Guys, 2019 raised a $37,000.500 pre seed round to launch his company, manageable.com, which helps teams get trained better, increases employee engagement. He got his former employer as first customer, now three customers. He's doing about $1,700 per month in revenue. He supported himself for the past five years while they built the MVP with consulting work, but is now saying, do I go full time? Do I go all in? We sure hope he does. Steve, thanks for taking

16:52us to the top.

Steve Petersheim

16:53>> It was a great summary, Nathan. You're you you got skills.

Nathan Latka

16:57One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

17:22Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

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18:06up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people.

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